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Canada's economic growth picks up | Canada's economic growth picks up |
(10 minutes later) | |
Canada's economy grew at an annual rate of 5% during the last quarter of 2009, its fastest pace of expansion in nine years, according to official figures. | |
The figures underpin claims the economy is recovering quickly from the fallout of the global downturn. | |
It comes after data for the previous three months showed growth of 0.9%, on an annualised basis. | |
The country's economy was boosted by rising consumption, government spending and property investments. | |
Canada's economy has rebounded strongly like its neighbour, the US. | Canada's economy has rebounded strongly like its neighbour, the US. |
A number of small and medium-sized companies need to diversify beyond that market Len Crispino, chief executive, Ontario Chamber of Commerce | |
The American economy grew at an annualised rate of 5.9% in the last three months of 2009, the Commerce Department said last week, revised higher from the first estimate of 5.7%. | |
A majority of Canadian exports head to customers south of the border, but businesses are being encouraged to focus on markets other than the US. | |
Len Crispino, the president and chief executive of the Ontario Chamber of Commerce, told the BBC World Service: "There are still concerns about how fast [the US] economy will pick up. A number of small and medium-sized companies need to diversify away from that market," he said. | |
Fast economic growth | |
Canada's growth, its fastest since the third quarter of 2000, was more than economists had predicted, as well as outstripping the forecasts of the country's central bank. | |
Canadian dollar strength could hamper recovery, analysts say | |
The news pushed the value of the Canadian dollar higher against the US dollar, a nagging concern for companies that export to America. | |
The independent Virginia-based economist, Dennis Gartman, is telling his clients to go long on the Canadian dollar, or the Loonie, as it is colloquially known. | |
He told the BBC World Service: "The data simply underscores the fact that the Canadian economy is in demonstrably better shape than that of the US. Am I surprised by the news from Canada? No I am not. I am only more certain that erring long of Canadian dollars and short of euro and sterling makes more and more sense," he said. | |
Higher interest rates? | |
The fact that the economy is growing faster than forecasts will be welcome at the Bank of Canada, but it also brings a new challenge, analysts said. | |
On Tuesday, the central bank is due to announce its latest decision on interest rates, and the strong economic growth puts it under pressure to consider increasing rates. | |
However, economists are predicting that the Bank of Canada will keep rates on hold for now, but increase the cost of borrowing in the coming months. |
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